Smoking out a bidder

30 April 2007 By John Foley Follow @johnsfoley

After rejecting rival Imperial Tobacco’s E15bn bid, the Spanish group is right to seek a private equity alternative. Getting up an auction can be the best way to secure a top price. But Altadis must show it can handle competing bids fairly.

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Altadis, the Spanish tobacco group, posted a document last Monday outlining the potential upside in its value. The group has rejected a conditional approach from UK rival Imperial Tobacco of E47 a share, valuing the whole company at E14.7bn including debt.

The defence document argues that Altadis has scope to cut costs, that pricing conditions in its home markets are improving, and that there is hidden value in the cigar business that makes up around a quarter of profits.

A number of private equity groups have already expressed their interest in buying Altadis, say people familiar with the situation. They are thought to include CVC, Cinven and PAI Partners.

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